Wednesday afternoon's business session at the PAPTAC Annual Meeting, sponsored by Natural Resources Canada, addressed the question "How will the Pulp and Paper Industry Evolve in a Carbon-Constrained World?" Not easily, it would seem.
Opening the panel, Jim Ferrel, Assistant Deputy Minister for Natural Resources Canada, discussed public policy considerations. Ferrel started out on a theme of change, and the resulting urgency, uncertainty, complexity, but also, importantly, the opportunity. Ferrel predicted that we will see a carbon-constrained world, higher energy prices, some form of emissions tax or cap-and-trade system and a high emphasis on efficiency. Ferrel, setting the tone for the rest of the panel, insisted that it is not enough to cut cost and to hang on, that in this instance, the past might not be a good guide to the future. He closed by stating that the sector is well positioned to prosper in a carbon-constrained world, based on a low carbon intensity product. But he closed with a caveat: will this sector lead, or react?
Don Roberts, from CIBC, while insisting on carbon's importance to the future of the industry, cautioned against seeing it as the only issue. Roberts, supporting many of the voices heard around the conference generally, supported a model of wood plants with integrated biorefinery as one of the best possibilities for the future of the industry. Integrated models showed better ROCE, a higher employment base (important to many policy makers, he reminded the audience) and better access to low-cost fibre. Again, however, there was a caveat: presently, the industry is responding, not leading, a situation Roberts felt untenable.
Following up where Roberts left off, and covering some of the same ground as her excellent keynote address, Jacquelyn McNutt reiterated that carbon is not the be all and end all of the future for the forestry sector. McNutt is executive director of the Center for Paper Business and Industry Studies at Georgia Tech university.
Public outcry based on climate change, and the public policy that follows, makes it an important issue, she noted. McNutt called for sustainable business models, while warning that the industry, as it stands, is ill-equipped to deploy new technology and cannot sustain major failure, creating a complex risk/reward pathway going forward. McNutt insisted also that the future of the forest sector lay in bioproducts, citing the relatively well tested technology, clearer markets, and available partners. McNutt tempered any enthusiasm with the statement that this also means more competition, and an eventual commodity market for many of the bioproducts, such as ethanol, to be produced. McNutt presented production flexibility as a key to the long term success, as well as strong partnerships with capable companies, and a strong, long-term vision to guide the steps along the way.
So it might not be an easy path, but there does seem to be a way for the pulp and paper industry to move forward in a carbon-constrained world. That path, however, is open only to the leaders, not those who simply react.